Latin "Broadband Soap Opera" of 2010 was not even funny

A Soap Opera has unfolded for nearly half a year down in South America as Argentina´s largest multi-media behemoth and Argentina´s telecomms regulator decided to get into a cat fight. The future of one of the main alternative network backbones to the phone companies´ is at stake.

Cablevision is Argentina´s largest pay-TV (cable tv) giant, which runs an Internet provider on the side with the Fibertel brand and using the firm´s hybrid Fibre-Coax (HFC) network. Last August, the firm got into hot water with the country´s regulating authority which declared its operation as an ISP void, in a media brouhaha that doesn´t make anybody happy and ends up damaging both the company and the government´s image.

Fibertel Network

The spat continues to this day, with the matter in the hand of the courts, some of which ruled against the firm, and several others in favour of it, with the latter ruling days ago siding with the company and protecting it from shut-down just days before the end of the year.

This Latin melodrama involves both alleged administrative mishaps by Cablevision´s ISP Fibertel, and strong-hand enforcing of the rules  – or a rigorous, meticulous interpretation of the law-, depending on who you ask. What could be a normal and boring spat between a regulator and a corporate giant -the American FCC has shut down Telecom firms before with very little brouhaha – has had some unforeseen consequences: the government showed little initial thought to the fate of its broadband users, who were quickly up in arms against the move.

Coax Networks Suck. Everybody Knows it.

What´s at stake in the end is who will provide service to around one million customers throughout South America´s second largest country. The government insists that users will have to switch providers, but ironically, the ISP has doubled promotional service plans to 6Mbit and claims it has won more users now than before the quarrel.

A similar dispute between cable providers operating as ISPs and the established telephone company ISPs several years ago in India. This one, however adds some Latin flavour to the imbroglio.

Country statistics
Here are some mid-2010 statistics to put things in context: a report published at Telesemana puts the number of broadband connections in the Far South nation at around four million households, for a near 40 per cent penetration rate. Two years ago, the number was two point nine million. ADSL service, provided by the local-loop monopoly incumbents account for 59 per cent of broadband market, with cable -of which there are less precise numbers- taking the other estimated 40 per cent, with the remaining one per cent shared between fibre -FTTP/FTTH- and fixed-wireless links.

Back in February, President Cristina Fernández decried Telefonica´s dominant position in the local telecomms market and vouched to prevent it from becoming a total monopoly. However, six months after this initial outcry came this move that most say will benefit the fixed telephony incumbents more than any others.

Entangled with Regulator
It all started when cable TV operator CableVisión engulfed the operations of its controlled ISP firm Fibertel, liquidating the latter company in the process of which it kept using only its brand name. The government argues -and some lawyers admit it might have a point there- that current regulations do not establish the automatic transfer of licences when one firm merges with another and that if a company is legally dismantled, any licensing rights it had disappear with it. Unless, of course, a transfer of such licence is made to the regulating authority, which the firm did not ask for.

In short, the Cablevision cable-TV provider should have requested a new license or else transferred its broadband users to one of its subsidiary ISP firms – which the firm also owns. It did nothing of that ilk and kept humming, defying government orders. As such, the regulating authority claimed that Fibertel had been providing “unauthorised services” and as such labelled the company´s operations “void”, giving it 90 days to migrate subscribers to other providers, which as you might imagine is a bit of an inconvenience for many, specially in areas where the only alternative is Telefonica´s local-loop monopoly.

Others across the political aisle see this as a tit-for-tat retaliation, part of the government´s effort to tame the Clarín Group media juggernaut. Clarín is one of Argentina´s largest media conglomerates, and the one that has the most to lose with the country´s new Media and Communications Services Law enacted by Congress in 2009 and which set limits on the number of radio and tv broadcast stations that any single media group can own. The relationship between the Cristina Fernández administration and the Clarín group went sour after the so-called “farmers revolt” two years ago. Some claim that such conflict escalated due to the biased, one-sided coverage of much of the private media, which sided with the road-blockers and against the government.

Local Loop Unbundling: the Elephant in the Room
What the government seems to be unwilling to do is tame the second monopoly: Telefonica´s local-loop one. This local subsidiary of Spain´s Telefonica is the fixed-line phone company that covers the Southern half of the country, and its parent firm in Spain in turn owns stake in Italy´s Telecom, which also owns stake in Telecom Argentina, the firm providing fixed phone service to the Northern half of the country. Confused yet? suffice to say it´s all part of a big happy family.

A presidential decree establishing “number portability” and “local loop unbundling” -which would bring competition to the ADSL market  was signed ten years ago, but the technical rules for LLU implementation were never published, rendering the norm dead as a dodo. Some heavily populated areas in Argentina´s capital enjoy having two options with regards to cable TV provider -and by extension cable-modem Internet,  in addition to the ADSL service provided by the local loop monopoly, but others in many cities do not.Number portability was finally agreed on this year, but only for mobile phones and after legal action by interested parties.

The only real hope for broadband users to escape both the telcos and the cable TV providers´ grip would be if someone comes along and brings Fibre to the home (FTTH), but that´s an expensive proposition to begin with, and only workable on densely populated areas. For all the rest, the real solution to users´ gripes and to get lower costs and multiple choices would be to enact local loop unbundling. So far, the authorities have been unable, unaware, or unwilling to implement this option.

Fibertel not dead, keeps going like the Energizer bunny
This spat between the cable TV company and the government was a shame for both sides. First, the TV conglomerate already operates other ISPs with valid, working licenses: PRIMA S.A. with its brands Datamarkets and Ciudad Internet. It would have been a matter of switching its users from one provider to another, and send invoices with the other firm´s brand/logo. They choose not to do so, helping victimise itself and waging a PR war against the regulating authority.

Second, the government was too harsh and overreacted, perhaps wishing to make an example out of them, and then promised things it clearly couldn´t deliver, like the creation of a government Free Wi-Fi service “throughout the nation” in 120 days. Those days have passed, and the government´s nationwide network is still in limbo and planning stages, with news published about only a single Wi-Fi node operating.

The media juggernaut claims that it saw the number of users increase by 150,000 since the conflict began, and also launched faster speeds with its six-megabit promotional offer. The latest court ruling just before the holidays by a Federal judge in the province of Córdoba -the country´s second-largest in terms of population-, protects users of Fibertel cable internet service in that province from being affected in any way by the regulating authority shutting down its service. You can read the ruling in this article published yesterday over here (Spanish). The government will likely appeal that ruling. “…And the band played on!.”

Was all this brouhaha even necessary to begin with?. In the past, this South American scribbler has heard people from other latitudes repeat the stereotype of “don´t get all Latin on me” which states that we Latin people kind of enjoy getting “all worked-up and angry”. I´m beginning to think that maybe there´s some truth to that statement.